Every year (and now every three months with rising inflation), media interest focuses on the increase in the minimum wage. How much will it increase? Will there be a push this time? With this (false) idea according to which increases in the legal minimum wage would set the pace for the evolution of salaries in France.
Now, this is a truism, but the increase in the minimum wage only determines the evolution of the wages of the people who receive the minimum wage. In periods like the current one, in which this minimum wage increases rapidly, the main measured consequence is the increase in the number of people who receive the minimum wage.
The proportion of employees who are now satisfied with the minimum wage is increasing rapidly. On January 1, 2021, they only represented 12% of employees. A year later, Dares estimates them at 14.5%, a level that had not been seen for fifteen years. Data for the current year is not yet known, but with the four minimum wage increases that have taken place since the first quarter, the share of employees receiving the minimum wage could approach or even surpass the 2005 record. This year, There are, one in six employees (16.5%) received the minimum wage.
Therefore, we see that increasing the minimum wage does not create an automatic domino effect for the entire wage scale. As Terra Nova pointed out in 2022, it is more the agreements of the professional sector that influence the remuneration scales within the company. If the social partners delay the renegotiation of these sectoral minimums, some could remain below the minimum wage level. This doesn’t mean that employees will be paid below the minimum wage (which is illegal), but they could be stuck there as their companies are not required to increase it despite their career progression. Hence the term “sticky floor” used to describe these low-wage traps.
When the minimum wage was revalued last May, 145 branches of the 171 with more than 5,000 employees were at least one conventional level below the minimum wage. Some even had 11, such as the chemical branch of the rubber industry. Today, according to the CFDT, there are still 76 of them who have minimum wages below the minimum wage. Two of them haven’t even updated their grids in more than two years.
The salary scale crushed from below
These limitations in social negotiation contribute to crushing the salary scale. According to INSEE, half of French employees earned less than 2,012 euros net per month at the end of 2021. The average net salary is therefore 20% lower than the average salary (2,500 euros per month), reflecting a greater concentration of wages at the bottom of the distribution. Furthermore, 80% of employees do not earn more than 3,200 euros per month.
For comparison, in the United States the average salary for full-time workers is, according to the Bureau of Labor Statistics, $1,100 per week, or $4,400 per month (4,180 euros).
To speed up negotiations within the branches, unions like the CFDT demand greater sanctions for recalcitrants. Today the “purchasing power” law of summer 2022 It allows the government to merge a power that does not respect the negotiation deadline with another more virtuous power. To date, this weapon has never been used. Some received warnings like the one from the casinos last September but things did not go any further. The merger is a serious sanction and too complex to implement.
Unions demand more dissuasive sanctions, such as the suspension of exemptions for low wages for companies in sectors that are slow to negotiate. This is what the new general secretary of the CFDT, Marylise Léon, requested in September in a letter to the President of the Republic.
These progressive reductions implemented in 1993 to combat mass unemployment by removing financial barriers to low-skilled employment can generate threshold effects. Since then they have expanded enormously. Employers would be tempted not to increase the number of employees beyond the tax exemption threshold.
Since 2019, the system allows, on the one hand, a reduction of 6 points in employer contributions to health insurance for salaries below 2.5 SMIC. Reduction of 4 additional points in pension and unemployment contributions up to 1.6 SMIC. And finally, an exemption from business contributions to the family branch up to 3.5 SMIC.
Regarding the conditioning of these exemptions, the Minister of Labor is skeptical. Firstly, on the legal level, remembering that it could be a violation of the principle of equality in matters of public charges and taxes, indicated by the Constitutional Council in 2009. But also on the feasibility level, by questioning the possibility of sanctioning an entire branch even though certain companies within this same branch may have compliant wage practices.
These themes of sharing values will be at the center of the social conference that opens this Monday. Value creation, on the other hand, will be driven by entrepreneurs who remember that productivity has fallen in France and that the proportion of wages in total value added increased by 0.3% between 2019 and 2023. The voice of “work more to share” more”.
Source: BFM TV
